Exsolution has been intensively studied in the fields of energy conversion and storage as a method for the preparation of catalytically active and durable metal nanoparticles. Under typical conditions, however, only a limited number of nanoparticles can be exsolved from the host oxides. Herein, we report the preparation of catalytic nanoparticles by selective exsolution through topotactic ion exchange, where deposited Fe guest cations can be exchanged with Co host cations in PrBaMn1.7Co0.3O5+δ. Interestingly, this phenomenon spontaneously yields the host PrBaMn1.7Fe0.3O5+δ, liberating all the Co cations from the host owing to the favorable incorporation energy of Fe into the lattice of the parent host (ΔEincorporation = −0.41 eV) and the cation exchange energy (ΔEexchange = −0.34 eV). Remarkably, the increase in the number of exsolved nanoparticles leads to their improved catalytic activity as a solid oxide fuel cell electrode and in the dry reforming of methane.